Rebeca Grynspan: Remarks Advancing Human Development

“Advancing Human Development: Towards policies that build social cohesion”
On the occasion of the International Conference on Social Cohesion and Development, OECD Conference Centre, Paris

It is a pleasure to join you here today for this Conference. I thank the Director of the OECD Development Centre, Mr. Mario Pezzini, for his kind introduction and for making this event possible.

I am pleased to have the opportunity to focus on an issue that is both of great importance to the development community - and is of particular professional interest to me. I arrived at this interest through my own experiences on all sides of the development process - as a policy maker, practitioner, researcher, and director of development. Each new role has brought additional evidence that widening social divisions, growing inequality, and increasing alienation are important obstacles to development progress.

Social cohesion offers a way to better understand these obstacles and a frame to overcome them. It forces us to consider not only the inclusive mechanisms that can build cohesive societies – such as employment, social protection, and education – but also the degree to which initiatives and policies support an implicit social compact that offers services and rights in exchange for civic responsibility. It suggests the importance of assessing development efforts, not just for their efficiency and immediate results, but for how well they increase people’s sense of belonging, build trust in institutions, and ultimately cultivate an environment where active citizens choose to work together to advance collective objectives. (ECLAC page 17)

As the deputy head of the UN Development Programme, an organization focused on the day-to-day reality of making development work through 135 country offices, I am eager to employ social cohesion as a tool for development effectiveness. My talk here today will therefore focus on examining the policies that can help build more cohesive societies and – in so doing – ultimately make development efforts more effective.

Social Cohesion: A component of human development
Finding ourselves often at the intersection of economic, social and environmental policy making, UNDP colleagues recognize the relevance of social cohesion. Indeed, it needs to be part of what we mean by Human Development – UNDP’s central mission and approach.

20 years ago the first Human Development Report argued that “people are the real wealth of a nation” and that development must be about expanding people’s ability to live long, healthy and creative lives that they value. In the eyes of the Report’s founders - Amartya Sen and Mahbub ul Haq – people are both the beneficiaries and drivers of human development that is far more than just increasing the GDP per capita.

As an object of public policy – social cohesion means just this - that all members of society perceive themselves to be both agents and beneficiaries of progress. In cohesive societies people are empowered – including through a sense of belonging - to be active contributors to collective objectives. As defined by OECD, a cohesive society is one that “works towards the well-being of all its members, minimising disparities and avoiding marginalisation.”

Social cohesion so defined is thus part of the Human Development paradigm, that also includes participation and voice, and that is more than just the HDI (the composite index that measures mainly education, health and well being). Precisely in the HDR 2010

innovative multi dimensional and qualitative measures were devised to complement the HDI. These include:

A new Inequality Adjusted HDI which shows how large losses to HDI are not only due to income inequality, but also due to large disparities in health and in education achievements. When Europe and Central Asia’s HDI value is discounted for inequality, for example, it experiences a loss of almost 14 per cent.

A specific Gender Inequality Index captures the loss in HDI which can be attributed to gender inequality. The index demonstrates that countries with an unequal distribution of human development also experience higher inequality between women and men.

There is also the new Multidimensional Poverty Index. It identifies overlapping deprivations at the household level in health, education and living standards.

These new measures were inspired by innovations undertaken in human development reports conducted by individual countries and regions - including measures intended to capture the degree of social cohesion – for example examining social exclusion in Bosnia and Herzegovina, exploring the underlying causes of conflict in Colombia, and considering citizen insecurity in Costa Rica.

Now let me turn to social cohesion as a means to human development. As I understand many of you discussed today, less cohesive societies tend to have greater levels of instability, conflict, violence and crime. Because in societies where individuals feel left without voice, representation or a sense of belonging, thus unbound by a social contract, individuals may be more inclined, remembering Hirschman on his idea of exit and voice, to turn to crime and violence, migrate, or remain in the informal sector .

In a UNDP study of 21 countries in Latin America and the Caribbean – we tried to measured not only the relation with inequality but with “polarization” which give us much better the distance between groups and its effect on Human Development. We found at the time (2007) that LAC is a region with polarization levels 40 percent higher than those of OECD countries – As others, different studies found that countries with high income polarization and inequality are i) more likely to have high levels of social conflict (Gasparini et al). ii) reduce the overall competitiveness of the economy and stunt growth; and iii) make fiscal policy more ineffective and inefficient (Lopez-Calva, 2004), because Governments are more likely to adopt unsustainable fiscal policies due to the influence and specific preferences of certain socio-economic groups (Woo, 2006) and because the lack of social cohesion can also make doing the right thing harder; collecting taxes becomes more difficult and high transaction costs can make implementing pro-poor and redistributive policies very expensive.

Social cohesion can also lead to better governance. Evidence suggests that cohesive societies are more likely to have governments able and willing to pursue collective ‘all encompassing interests’ – rather than rewarding the privileged and few (Easterly page 9).

Last year’s twentieth anniversary Human Development Report demonstrated again that growth alone does not tell us the whole story: a forty year review of human development revealed that countries which have the fastest growth are not necessarily the ones achieving the largest gains in Human Development. It is not only growth, BUT INCLUSIVE AND EQUITABLE growth, which is behind the best performers in the Human Development index.

Development efforts must continue to look beyond growth rates and focus on efforts specifically shaped to achieve the type of economic growth that contributes to social cohesion and human development. And I say both because we also have the other case: where there are improvements in the non-income part of the HDI but not necessarily other conditions for sustaining progress and increasing social cohesion are met . As we say in the report, unfortunately, not all good things come together and we have good performers in education and health but not in democratic governance (or accountable governments), gender, or employment opportunities, specially for the young.

So let me take this last thought further and ask ourselves which social policies are key to advance this agenda? I will group this policies into four categories , but before listing and discussing them let me make a general comment on “the design of social policies”:

With this in mind let me finally turn to the 4 categories of policies:

1. The first are policies and interventions that improve productive opportunities. Expanding and improving productive opportunities can have a major effect on social cohesion, as it strengthens people’s perception of themselves as agents. (ECLAC page 109)

Unfortunately, the global recession forced many people into unemployment and vulnerable economic situations. The tepid global recovery has not yet generated sufficient job growth to return to pre recession levels. The ILO estimates the number of vulnerable workers worldwide represents just over half of the world’s working population.

Both the private sector and public policy have a crucial role to play by fostering a job rich growth for a more inclusive and equitable development.

The state can help prepare people to enter or reenter the labour market by putting in place the necessary pre-conditions. Quality education – from early childhood and basic education to professional training - is critical for preparing individuals for the labour market. To be effective, education systems must integrate skills valued by the labor market. To maximize the return on social cohesion, education must be made accessible to the traditionally excluded, including minority groups and those living in remote areas. Laos, for example, drew on the assistance of the UN to target its most remote districts – including by actively recruiting local villagers for teacher training; Egypt made girl’s education free within newly inaugurated ‘girl-friendly schools,’ and provided meals to children in poor communities.

Economic policies must also be shaped by desired social outcomes. Employment and decent work objectives should inform macroeconomic frameworks and budget decisions.

Especially where growth is jobless, employment may also be proactively created. Effective tripartite consultations involving government, employers and workers can help determine the best policies. Public work programmes and unemployment guarantee schemes can be effective in reducing unemployment and alleviating short-term poverty while at the same time, if well designed, also create valuable public goods, particularly at the community level. Examples include Argentina’s Programmes for Unemployed Male and Female Heads of Household which contributed to the national poverty line falling from 54.7 percent in 2003 to 26.9 percent in 2006. The programme covered 1.95 million workers, costing less than one percent of GDP.

And the world’s largest job creation scheme in India benefits 46 million households, with women representing around 51 per cent of those accessing the programme of 100 days work a year guarantee.

Fostering inclusive financial markets can also be important to ensure micro, small and medium sized enterprises can access credit and technical support. Legal reforms can help small and micro businesses move into the formal sector.

And then we have the important conciliatory measures between work and family which have been so critical in promoting women access to decent work employment and gender equality in the labor market. The Gender dimension of social cohesion is key for the policy framework.

Sectoral policies have also reemerged as a valuable tool, hopefully taking into account lessons learnt from the past: Agricultural and rural development policies (and value chain approaches); the reemerging discussion on industrial policies as means to create more and high-skill jobs and speed up structural changes, both in developed and in developing countries by including strategic public investments in infrastructure or R & D; establishing private-public venture funds or incentives for private firms to innovate and pursue new and potentially productive areas of business- such as the emerging ‘green sector’.

2. A second set of policies important for social cohesion and human development are policies that establish inclusive social protection systems and address vulnerability and risk.
Enhanced social protection contributes to social cohesion by protecting citizens from events that hit them, increasing their vulnerability and forcing them to take decisions that compromise their long term well being. Indeed, UNDP’s HDR on Climate Change from 2007 / 2008 found alarming evidence of the impact of drought on the life chances of children. Being born in the same year as a drought in Kenya, for example, was found to increase the likelihood of children being malnourished by 50 percent. In Niger, children aged two or under who were born during a drought year and were affected by it were 72 percent more likely to be stunted by malnutrition (HDR 2007/2008 page 89). Feeling reduced risk from social protection systems can build trust in public institutions and reinforce the idea of a social compact because citizens perceive that they belong to a shared system which strives to shield them from certain, potentially catastrophic risks. (Filgueira, 2006).

In countries around the world, UNDP advocates for social protection systems that cover the most vulnerable in order to prevent economic crises, commodity price spikes or increasing numbers of natural disasters from translating into permanent and costly development setbacks. It does this in keeping with the UN wide initiative, established in response to the global economic crisis, to establish a Social Protection Floor for All.
The idea is to ensure availability, continuity, and universal access to essential services through a system of well established transfers (United Nations, 2010).

The MDGs agenda is also part of this effort. I have no time to expand on the MDG action plan but let just mention that through a new tool called the MDG Acceleration Framework – UNDP and the UN system are helping countries systematically speed up progress on poorly performing goals – in many cases by reducing in-country disparities and explicitly reduce inequalities through a multidisciplinary, multi-stakeholder consultative process. Like the example I gave on Laos expansion in education or in Togo or Uganda, where efforts are being undertaken to ensure that the needs of small land-holder farmer, who are often women, are being met through improved extension services and expanded access to key inputs.

3. A third category important for social cohesion and human development is fiscal policy.

Fiscal policy can be a powerful tool in reducing poverty and promoting social cohesion. Well-administered public finance can increase revenues and improve the delivery of reliable and fair public goods and services. Fiscal policies that foster social cohesion need to include:

(i) clear rules of fiscal discipline, accompanied by adequate tax revenues to finance the functions that society assigns to the state;
(ii) transparency of public expenditure;
(iii) an unambiguous efficiency criteria for the management of state resources – which ensures the effectiveness and timeliness of expenditures;
(iv) acknowledgement of the central role played by the public budget in the provision of goods and services and, more generally, in the distribution of income; and
(v) the design of balanced and democratic fiscal institutions, which include citizens’ participation (Ocampo, 2004).

Unfortunately reviews of tax systems in the developing world, including in middle income countries, demonstrate that these conditions do not often exist.
Tax system reforms require strong political will as well as the institutional and administrative capacity to be able to ensure spending quality. These can be difficult pre-conditions in a developing country context. (ECLAC p 135)
That is why political processes that enable voice and facilitate participation can also help to legitimize the level, composition and direction of public spending and the tax burden necessary for its functioning. One way this can be done is through negotiated fiscal pacts that make the collection of revenue more accountable, transparent and responsive to the needs of the population.

4. The fourth and final category is establishing norms and institutions that encourage participation in decision making processes and provide vehicles for managing conflict and build consensus between groups. How do we build a “citizen democracy” based on rights and voice, that includes the right to a state that delivers justice and services for all?

Citizen engagement and participation contributes to social cohesion as it gives people not only a sense of belonging but a sense of agency and contribution – thus completing the social contract. Open and free civic space and an active civil society are key. Participation in political parties, protests, citizen’s groups, trade unions and entrepreneurial organizations provide the space for individuals to build trust and express voice, mainly between groups.

The UN’s peace building efforts, for example, aim to explicitly reduce social tension and rebuild social capital after conflict. In the Philippines, for example, UNDP is helping the Ministry of Social Solidarity enhance stability in post-conflict regions, including by meeting the needs of former combatants and their families and undertook initiatives designed to increase interaction and build confidence between Muslim, Christian, and indigenous communities, the government, and former combatants.

UNDP in Bolivia is also engaged in an initiative aimed at strengthening democracy and social cohesion by improving the capability of key actors to construct effective policies and resolve conflict through dialogue and democratic contest. Newsletters, reports, manuals and other information sources on relevant topics are shared with select government, civil society actors, who were also targeted for training and technical assistance – providing opportunities for dialogue and negotiation.

To finalize let me say, that given the difficulties involved in achieving progress, and build more cohesive societies, what amazes me is that much progress have been achieved. which suggest that social cohesion can indeed be created through well designed, smart policies – that integrate social, political, and economic objectives . This is good news for the sustainability of our efforts to advance human development.

Unfortunately, it is also true that in many countries around the world, many forces are causing people to lose their sense of belonging, their identification with collective objectives and their bonds of solidarity. This reveals the importance of efforts to actively “create societies” that embrace diversity and demonstrate an awareness of social responsibility of individuals and groups. Today more that ever cooperation at the national and international level are two faces of the same coin. So let’s hope that also at the international level we build the conditions necessary for the social cohesion policies at the national level to succeed.

If our efforts can contribute to this end, we will have helped to enlist millions of active and engaged citizens in the struggle to advance human development in countries around the world. Nothing could be more effective for the short and the long term. Let’s always remember that the short and the long term start at the same time!